Terabitz Blog

The MLS mess and how to dig out of it

Roughly 900 MLSs serve real estate markets across the United States and nearly all of them are in danger of becoming extinct. It’s time for MLSs to realize there is a new master in town – the consumer – and they will need to shift their thinking to how to serve this segment to stay alive.

The MLS mess is evident on many levels. Inconsistent methods for measuring and communicating basic property data continue to plague the systems. The same parcel can be measured in square feet within one MLS and as acreage in another. One MLS will record a partial bathroom as one-tenth, and another simply says partial bath. Some markets still struggle with the hard grip on information like those in which MLSs will not allow property addresses to be displayed.

This mess causes unbelievable problems for technology systems, brokers who are trying to serve areas that fall into more than one MLS’ turf, and consumers who just want to be able to compare homes in their searches.

It’s true that MLSs were not built as consumer utilities, but the reality is that the world has changed drastically since most opened their doors many decades ago. Because most MLSs do not feel the need to serve consumers, an unmet need already has been seized by online companies offering easy access to information.

Here are three things that brokers, agents and MLSs should do now to shift their place in the new world and secure value propositions that are consistent with the needs of the marketplace:

1. Make data transparent and consistent. Real estate data needs to be readily available to everyone in order to conform to today’s standards and the way in which consumers expect to interact with the industry. And this data needs to be consistent. A partial bathroom must be defined and consistent from MLS to MLS – at least among geographically neighboring MLSs.

2. Accept their new roles. We all understand that MLSs initially were not built as databases to be seen and utilized by consumers, but it’s time to grow past this and catch up with the modern world. MLSs and agents alike need to get beyond the notion that they are guardians of some secret treasure. Information is ubiquitous in a Web-enabled world.

3. Become consumer-centric. Once everyone accepts that they have a new role with consumers beyond information gatekeeper, each can focus on building an incredible set of services around the data that is now everywhere. MLSs can focus on providing technology or governance services to members. Agents can focus on helping consumers interpret all this data and process it in a way that helps them meet their housing goals.

Releasing data is the best thing that could ever happen to the real estate industry. When consumers reach a point where they have so much information to the point of being overwhelmed, suddenly, the agent is even more necessary to the process. Consumers need the expertise of an agent to help guide them through all this information and match it to their lifestyles in a way that makes sense.

Real estate search has no meaning

Today, all online real estate searches start with a 30,000-foot view of the earth, then pull you into states and cities. If you’re lucky, you get neighborhoods that you can understand in the terms that you have in mind. After this, you must draw parameters around your preference for number of bedrooms, bathrooms and square footage.

But when is the last time that a buyer stepped into a real estate agent’s car and laid out their desires like this? When seeking our next home, we tend to think more about our lifestyle. We want to be able to walk our kids to elementary school and not have to go more than five blocks to get basic grocery items, as an example. A park would be nice.

This is the way we think about buying our next home. This is the way we think about where we want to live. Yet, no MLS systems or real estate search sites capture information this way, let alone enable agents and consumers to search in this manner. Agents include descriptions next to listings, but people rarely pay attention to those due to the twisted meaning of phrases like “cozy and comfortable,” which means small and cramped, or “urban and hip,” which often means crime-ridden and grungy.

What’s missing from real estate is a system that helps push matches to consumers based on their lifestyle choices, their demographic. These systems exist within other verticals. Just look at Amazon, where you can search for a book and be led down a path that offers other books you may be interested in based on what other people who looked at this book also looked at or purchased.

Everyone in real estate has the same product with no different ways of presenting it.

One way to solve this problem is to build systems that capture this information, systems that capture and quantify what defines a livable neighborhood based on buyers’ real preferences. This system needs to capture what the buyer tells an agent when they first meet. “We want a nice, quiet neighborhood where people are friendly and kids have a place to play together. We want a house that fits our family of four, with room for grandma when she visits.” This, rather than “2,000-square-foot rancher with four bedrooms on a quiet street.” See the difference?

It is critical that real estate search systems begin to capture information about what is just down the street or three blocks away, what a school that’s rated a “four” really means, what a buyer is really looking for when considering their next move.

Maybe it’s a wiki that captures this lifestyle information. Maybe it’s agents taking note and quantifying the livable aspects of neighborhoods. Or maybe it’s deeper integration of various data into real estate search. Whatever the technological answer, it needs to infuse meaning into real estate search. If Amazon can do this for books, it can be done for homes and lifestyle.